Longmont enters closing argument on Dillard's case

Claims no 'bad faith' proven, court shoud give possession of store

LONGMONT -- Twin Peaks Mall will close at the end of the year. But will Longmont get to close on Dillard's' now?

That's the question at stake in a case brought by the Longmont Urban Renewal Authority, which wants immediate title to the clothing store so the mall can be rebuilt. On Friday, LURA presented its written closing argument, saying that claims by Dillard's of bad faith remain unproven and that title should be reassigned by Oct. 1.

"Absent immediate vesting of title, the redevelopment project is in jeopardy," attorneys Robert Duncan, Donald Ostrander and James Birch wrote in the argument.

A closing argument by Dillard's attorney is due Aug. 12.

Longmont closing arguments vs. Dillard's

The mall's current owner, NewMark Merrill Mountain States, plans an $80 million redevelopment of Twin Peaks. But Dillard's, which owns its own building, holds an agreement that lets it veto changes to the mall. Negotiations continued for roughly 18 months before falling through earlier this year.

NMMS managing partner Allen Ginsborg said Friday that, whatever the result of the case, the current mall would be closed at the end of 2013.

If title is not vested, LURA -- and, subsequently, NewMark Merrill Mountain States -- would not be able to take possession of the property until after a jury determines how much the store is worth. An appraisal by Boulder County valued it at $2.9 million; during its own negotiations, LURA offered $3.6 million.

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In talks with first NewMark and then LURA, Dillard's submitted a counter-offer of $5 million. LURA filed to condemn the property in May.

At a July 25 court hearing, Dillard's attorney Leslie Fields argued that it was unconstitutional to let title pass before a value was reached by a jury, and that LURA had shown "bad faith" in making the decision to blight the mall. The real issue, she said, was not that Dillard's or the mall was blighted, but that the city saw a chance to make more money by saying so and that Dillard's agreement stood in the way. By law, blight and condemnation cannot take into consideration the economic performance of the property.

"This is being done to enhance the economic future and tax-generating qualities of Twin Peaks Mall," Fields said in court. "These were the considerations of the city, long before there was any talk of blight."

Much of the testimony last week revolved around whether Dillard's agreement was "unusual" and a blight condition in and of itself. Fields noted that the agreement couldn't have made the property unmarketable since NewMark bought the mall, while LURA's attorneys commented that NewMark had bought it out of foreclosure rather than on the open market.

Dillard's vice president for real estate Chris Johnson testified last week that he didn't consider his store blighted. In their closing argument, LURA's attorneys noted that no one from Dillard's ever challenged the blight finding and that the store itself didn't have to be blighted -- it just had to be part of a blighted area and needed to fix it.

"(Johnson) indicated he was too busy to fly to Colorado and attend public hearings," the LURA attorneys wrote. "However, a store manager or assistant manager from the Longmont store could have easily attended the blight hearing and observed. There was no need for the vice president of real estate in particular to be present."

Fields also had brought up a 2006 retail study and 2008 economic development workshop that demonstrated how much business and sales tax a redeveloped mall might capture. LURA's attorneys noted that most of the city officials involved in the 2012 blight study had come aboard after 2008 and that neither the workshop nor the retail study were part of the information provided in considering the study.

Boulder District Court Judge D.D. Mallard has not yet ruled on the constitutionality of the vesting law itself. In responding to Fields, LURA's attorneys argued that courts had found that immediate possession did not violate a property holder's rights under the Colorado Constitution, so long as the condemning agency made a security deposit. Under law, if that deposit turns out to be too low, the property owner can collect 8 percent interest as part of the final judgment.

"If the courts adopt the view that only a 'temporary suspension' of proprietary rights may occur without a final determination of just compensation, then no major construction project involving permanent possession of properties early in the project ... could ever occur," the LURA attorneys wrote, citing FasTracks and the E-470 tollway as examples. "This would overturn what has been approved by the Legislature and in practice for many decades."

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